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Ipca Laboratories Ltd Research Report - 16th Aug 2016

Pharmaceutical | Published on Aug 16th 2016

IT

For 1QFY2017, the company posted better than expected sales and OPM while the net profit missed our estimates. Sales came in at Rs822cr V/s Rs680cr expected and V/s Rs751cr in 1QFY2016, ie a yoy growth of 9.4%. Formulations (Rs620cr) posted a yoy growth of 15%, while API (Rs202cr) posted a yoy de-growth of 3%. On the operating front, the EBITDA margin came in at 13.1% V/s 9.6% expected, V/s 10.0% in 1QFY2016, and V/s 8.4% in 4QFY2016. Other income (Rs17.4cr) posted a yoy growth of 56.2%. Thus, the Adj. net profit came in at Rs48cr V/s Rs52cr expected and V/s Rs28cr in 1QFY2016, a yoy growth of 69.9%. We maintain our Buy on the stock. Results better than expected on sales and operating fronts: Sales came in at Rs822cr V/s Rs680cr expected and V/s Rs751cr in 1QFY2016, ie a yoy growth of 9.4%. Formulations (Rs620cr) posted a yoy growth of 15%, while API (Rs202cr) posted a yoy de-growth of 3%. Domestic formulation sales (Rs345cr) posted a yoy growth of 9%, while exports formulation sales (Rs275cr) posted a yoy growth of 22%. Domestic API sales (Rs35cr) posted a de-growth of 37% yoy and exports API sales (Rs166cr) posted a growth of 9% yoy. On the operating front, the EBITDA margin came in at 13.1% V/s 9.6% expected, V/s 10.0% in 1QFY2016, and V/s 8.4% in 4QFY2016. Thus, the Adj. net profit came in at Rs48cr V/s Rs52cr expected and V/s Rs28cr in 1QFY2016, a yoy growth of 69.9%. Outlook and Valuation: We expect net sales to post a 15.6% CAGR to Rs3,799cr, and EPS to register a 36.5% CAGR to Rs19.7 over FY2016–18E. The company’s financials will be impacted by the USFDA import alert on the Ratlam, Indore and Silvassa facilities. While the problems are likely to persist for a while, we expect the company’s performance to witness a gradual pick-up going forward. Given the inexpensive valuations, we maintain our Buy rating on the stock.

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CMP 532
Target Price 613
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)7,213.59
MCAP NSE (Rs in Cr)7,245.77
P/E (x)44.14
EPS (Rs.)12.95
BV (Rs.)187.95
Div Yield (%)0.00
FV (Rs.)2.00
P/BV (x)3.04
EV/Sales (x)2.74
EV/EBITDA (x)24.21

Shareholding Pattern (%)

Promoter46.0
Institution22.0
Foreign16.0
Public & Others13.0
Corporate3.0
Grand Total100.0

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